There are plenty of uncertainties when it comes to starting and running a business. The one thing that is certain, though, is the fact that you will struggle financially at one point or the other. It’s just part of having a company. It is also the biggest challenge you could ever face in this wild ride. You will learn to manage people and handle their problems, and you will successfully market your brand, but it’s the finances that could end the company if you don’t come up with answers.
These are some smart ways to finance your struggling business.
The great thing about starting a company is the fact that it is never too late to attract investors. Some people think it is easier at first when you’re showing promise with a great business idea, but that is not necessarily the case. Every startup goes through rounds of funding, and the more promise you show in later rounds, the easier it will be to attract investors and get financing. If you have proven that your brand is selling, but you just need some financial help for product development and expansion, you can and probably will attract investors. Options worth exploring include accelerators and angel investors who can really put your company back on track.
Merchant Cash Advance
Contrary to popular belief, merchant cash advances aren’t exactly loans. This is one of the best ways to finance a struggling business as the process is quite fast, so you do get the money pretty quickly. The financial advisors from www.loanry.com/blog/merchant-cash-advance-money-today explain that the amount of money you can get your hands on depends on your business credit sales. When you apply for a merchant cash advance, the provider will look into your credit card sales, which you will be selling a percentage of in the future in exchange for the money. They also evaluate the risk and examine your ability to repay the money. Then, a percentage of your daily credit card sales are withheld monthly, and this will keep happening until the full amount is paid.
Another option you have is getting a business loan. There are several small business loan options that you can choose from, and you need to find one that works for your company. You should know, though, that banks aren’t always the way to go, because they are often reluctant to give out loans to small businesses. So, they might complicate things for you, and it might take longer than you want. The second way to go would be credit unions, but they might view it the same way as banks would. There are also peer to peer lending options, but the sums of money you can get out of those aren’t usually substantial. So, explore those different approaches and see which doors would open for you.
This is one of the less commonly known approaches in business financing, but it’s actually pretty efficient. Factoring is when you sell your receivables –– invoices –– at a discounted price to a third party. It is a perfect approach for businesses with bad credit scores, and it’s also ideal for companies who have to wait for a while before they get paid for their products, like clothing manufacturers. You should know, though, that this financing method isn’t cheap. Selling a part of your receivables for cash advances is often equivalent to large interest rates annually. So, make sure this is the best way to go before you start factoring.
Have you considered crowdfunding? Believe it or not, it is actually a very efficient way to attract financing, and it has helped several companies over the year to launch new products. Whether it is from your acquaintances or strangers interested in what you have to offer, crowdfunding is a great way to raise funds for a small new project you need to get your company back on its feet.
Business Credit Cards
While this might not be the smartest approach, it is a very efficient one nonetheless. Business credit cards can help your company get out of a tight financial spot, but they are very risky. If you missed payments, your credit score can take a serious blow. Paying the minimum isn’t the best way to go either. But if you used those credit cards reasonably, you can get your business out of this safely.
You need to consider each and every one of those options and from all angles. Each approach has its pros and cons, and it’s up to you to determine what level of risk you’re willing to take. At the end of the day, you’re going to pay interest rates or extra money. But if that is what it takes to get your company on its feet, it’s well worth it.
-A dad of 3 kids and is a keen writer covering a range of topics such as Internet marketing, SEO and more! When not writing, he’s found behind a drum kit.